Broker RBS Morgans was in the market for a strategic buyer on Tuesday, telling shareholders it was buying on behalf of a client who wanted the dairy company to remain an independent listed company.

The broker had been seeking to buy shares at $9.25 each. More than 3.2 million shares, or 5.7 per cent of Warrnambool, had changed hands by midday AEST on Tuesday. The shares were up 89¢, or 10.7 per cent, to the $9.25 bid price.

Lion confirmed late on Tuesday that it had acquired a shareholding of 9.99 per cent.

Investor sources said an unknown strategic buyer had a large order in the market, seeking to buy Warrnambool Cheese & Butter Factory Company shares at $9.25 each.
Photo: Damian White

“Lion has enjoyed a close relationship with WCB over many years and WCB plays an important role in Lion’s cheese business," the company said in a statement.

“Lion considers this stake a continuation and strengthening of this relationship."

Sources said the move was designed to spoil a full takeover and Lion may turn its attention to management changes at Warrnambool.

The buying comes as Warrnambool is locked in a takeover tussle, with shareholders Bega and Murray Goulburn, as well as Montreal-based Saputo, making takeover bids in the past six weeks.

Related Quotes

Company Profile

The highest offer currently stands with Saputo, which made a revised $8-a-share cash bid on Friday.

Since Bega began the takeover battle, launching the first bid on September 12, the Victorian dairy’s shares have more than doubled. Warrnambool’s shares have climbed 14 per cent in the past week. In January, they traded at a 52-week low of $3.50.

RBS Morgans has told institutions it is acting for an investor seeking to block Saputo’s bid and see Warrnambool remain as an independent listed entity.

The broker told clients the buying would stop on Tuesday afternoon.

Geoff Wilson, principal at fund manager Wilson Asset Management, said his firm sold its Warrnambool stake of about 900,000 shares, worth 1.5 per cent of the company, on Tuesday morning.

“It’s been a very, very profitable trade for us," Mr Wilson said. “We got into it about $4.31 and bought as low $3.90. Sold at $9.25."